Global IME‚ Commerz and Trust Bank initiate merger process

KATHMANDU

November 11, 2013

 The biggest merger in the banking sector is in the offing, as Global IME Bank and Commerz and Trust Bank Nepal have entered into an agreement to consolidate the two units.

A memorandum of understanding, in this regard, was signed today by chairman of Global IME Bank Chandra Dhakal and chairman of Commerz and Trust Bank Shovakar Neupane.

“We decided to enter into another merger agreement as other consolidation processes that we completed in the past gave a boost to our capital position.

We are sure the successful completion of this process will further give a lift to our capital base and strengthen our position in the market,” Global IME chairman Dhakal said.

The bank, which was originally known as Global Bank at the time of its establishment, has so far merged with five other financial institutions. But this is the first time it is trying to consolidate with a commercial bank.

If the merger process ends successfully, this will be the second instance of consolidation of two commercial banks in the country, following the merger of NIC Bank and Bank of Asia Nepal. Successful completion of the merger will also turn the consolidated unit into the largest bank in the country in terms of paid up capital.

Global IME Bank, which has successfully completed merger with five other financial institutions, currently has a paid up capital of Rs 2.42 billion, while Commerz and Trust Bank has a paid up capital of Rs 2 billion. Once the two units consolidate, the new unit will have a paid up capital of Rs 4.42 billion.

To take the process ahead, the two banks have already established a merger committee and are filing an application at Nepal Rastra Bank tomorrow to get the banking sector regulator’s nod to formally initiate the consolidation process.

“We will then conduct due diligence audits which will give a complete picture of the financial health of the two institutions,” Dhakal said. “Based on the results of the audits, we will determine shareholders’ stake in the consolidated unit.”

However, right on the onset of the merger, the two banks have agreed to accept Dhakal and Ratna Raj Bajracharya, CEO of Global IME, as chairman and chief executive of the consolidated unit, respectively. “Besides, we have also agreed to include only one representative of Commerz and Trust Bank in the board of directors of the consolidated unit,” Dhakal informed.

Global IME booked a net profit of Rs 271.43 million in the first quarter of the current fiscal year as against Rs 83.82 million in the same period last fiscal. First quarter results of Commerz and Trust, however, are not out yet. The bank had posted a net profit of Rs 58.62 million in the last fiscal.

Source: The Himalayan Times